Welcome to the MBIA Inc Second Quarter 2025 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations of MBIA. Please go ahead, sir. Thank you, Erica. Yes, welcome to MBIA's Conference Call. After the market closed yesterday, we issued and posted several items on our websites, including our financial results, 10-Q, quarterly operating supplement, and statutory financial statements for both MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance companies' insurance portfolios. Regarding today's call, please note that anything said on the call is qualified by the information provided in the company's 10-K, 10-Q, and other SEC filings as our company's definitive disclosures are incorporated in those documents. We urge investors to read our 10-K and 10-Qs as they contain our most current disclosures about the company and its financial and operating results. Those documents also contain information that may not be addressed on today's call. Definitions and reconciliations of the non-GAAP terms included in our remarks today are also included in our 10-K and 10-Qs, as well as our financial results report and our quarterly operating supplement. The recorded replay of today's call will become available on the MBIA website approximately two hours after the end of the call. Now, here is our safe harbor disclosure statement. Our remarks on today's conference call may contain forward-looking statements. Important factors, such as general market conditions and the competitive environment, could cause our actual results to differ materially from the projected results referenced in our forward-looking statements. Risk factors are detailed in our 10-K and 10-Qs, which are available on our website at mbia.com. The company cautions not to place undue reliance on any such forward-looking statements. The company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such a statement is no longer accurate. For our call today, Bill Fallon and Joe Schachinger will provide introductory comments, and then a question and answer session will follow. Now, here is Bill Fallon. Thanks, Greg. Good morning, everyone. Thank you for being with us today. Our second quarter 2025 financial results had a lower net loss than the comparable period for 2024. Compared to 2024, our second quarter 2025 financial results benefited from lower losses in LAE and lower investment and BIE losses at MBIA Insurance Corp. Our priority continues to be resolving National's PREPA exposure, where the timing of that resolution remains uncertain. Currently, the Title III court is addressing the administrative expense claims. Given the uncertainty associated with the possible outcomes for National's PREPA bankruptcy claim, which is in excess of $800 million, we continue to believe that the process to sell the company to maximize shareholder value will likely require substantially reducing the uncertainty regarding PREPA. Regarding the balance of National's insured portfolio, those credits have continued to perform generally consistent with our expectations. The gross par amount outstanding for National's insured portfolio has declined by approximately $1.1 billion from year-end 2024 to about $24 billion at June 30th, 2025. National's leverage ratio of gross par to statutory capital was $26 billion to $1 bliion at the end of the second quarter. As of June 30, 2025, National had total claims-paying resources of $1.5 billion and statutory capital and surplus in excess of $900 million. Now, Joe will provide additional comments about our financial results. Thank you, Bill, and good morning all. I will begin with a review of our second quarter 2025 GAAP and non-GAAP results and then provide an overview of our statutory results. The company reported a consolidated GAAP net loss of $56 million, or a - $1.12 per share for the second quarter of 2025, compared with a consolidated GAAP net loss of $254 million, or a - $5.34 per share for the second quarter of 2024. The lower GAAP net loss this quarter was mostly driven by lower losses in LAE at National, primarily on its PREPA exposure. National's loss in LAE for the second quarter of 2025 was $6 million, compared with $141 million for the second quarter of 2024. The larger losses in LAE for the second quarter of 2024 related to National's exit from the then proposed PREPA plan of adjustment, prompting us to revise our loss scenarios to reflect a range of negotiated and litigated outcomes. Also contributing to lower GAAP net losses this quarter, but to a lesser extent, were lower net losses on financial instruments relating to the revaluation of MBIA Insurance Corp's equity interests in a Zohar-related portfolio company received in connection with claims paid on the Zohar CDOs and lower losses at MBIA Insurance Corp related to insured variable interest entities, or VIEs. Higher VIE losses in the second quarter of 2024 primarily related to the deconsolidation of a VIE as part of our strategy to de-risk MBIA Insurance Corp's insured portfolio, with no comparable activity in the second quarter of 2025. The company's adjusted net loss, a non-GAAP measure, was $8 million, or a - $0.17 per share for the second quarter of 2025, compared with an adjusted net loss of $138 million, or a - $2.90 per share for the second quarter of 2024. The favorable change was primarily due to the lower losses in LAE at National. MBIA Inc's book value per share decreased $2.15 to a - $43.14 per share as of June 30th, 2025, from a - $40.99 per share as of December 31st, 2024. This decrease was primarily due to our $118 million consolidated net loss for the first six months of 2025, partially offset by a decrease in unrealized losses on investments recorded in accumulated other comprehensive income. Included in MBIA Inc's book value as of June 30th, 2025, is MBIA Insurance Corp's negative book value of $51.49 per share, which decreased from a - $49.48 per share as of December 31st, 2024. I will now spend a few minutes on our corporate segment balance sheet. The corporate segment, which primarily comprises the activities of the holding company, MBIA Inc, had total assets of approximately $677 million as of June 30th, 2025. Within this total are the following material assets: unencumbered cash and liquid assets held by MBIA Inc totaled $355 million, which was down from $380 million as of December 31st, 2024, primarily due to interest payments on the corporate segment's debt. In addition to the unencumbered cash and liquid assets, the corporate segment's assets included approximately $214 million of assets at market value pledged to guaranteed investment agreement contract holders, which fully collateralized those contracts. Now, I'll turn to the insurance company's statutory results. National reported statutory net income of $6 million for the second quarter of 2025, compared with the statutory net loss of $131 million for the second quarter of 2024. The positive variance primarily reflects lower losses in LAE related to National's PREPA exposure. National's statutory capital as of June 30th, 2025, was $914 million, up $2 million compared with December 31st, 2024. The increase in statutory capital was driven by year-to-date net income of $11 million, which was mostly offset by an increase in unrealized losses on investments. Claims-paying resources were $1.5 billion and continue to be consistent with December 31st, 2024. Now, I'll turn to MBIA Insurance Corp. MBIA Insurance Corp reported statutory net income of $4 million for the second quarter of 2025, compared with a statutory net loss of $35 million for the second quarter of 2024. The favorable variance was primarily due to lower losses in LAE. A small losses in LAE benefit in the current quarter was primarily driven by favorable adjustments to recoveries of paid claims associated with the Zohar CDOs, while $34 million of losses in LAE in the second quarter of 2024 was primarily driven by unfavorable adjustments to our Zohar-related recoveries. As of June 30th, 2025, the statutory capital of MBIA Insurance Corp was $92 million, which was $4 million higher than year-end 2024. Claims-paying resources totaled $346 million at June 30th, 2025, compared with $356 million at December 31st, 2024. MBIA Insurance Corp's insured gross par outstanding was $2.2 billion as of June 30th, 2025, down from $2.3 billion at year-end 2024. We will turn the call over to the operator to begin the question- and- answer session. Thank you. If you have a question at this time, please press star one on your telephone keypad. If you wish to remove yourself from the queue, press star two. We ask that when posing your question, you please pick up your handset to allow optimal sound quality. We'll take our first question from Tommy Joynt with KBW. Please go ahead. Good morning, guys. Thanks for taking our questions. The first one, I see in the 10-Q a disclosure about National transferring certain PREPA bankruptcy claims to a custodian. A few questions around that. First, can we interpret this action as a signal that you guys are marketing, selling those claims to potential buyers? Secondly, is there a potential liquid buyer pool for those claims? It looks like you only transferred certain claims on the PREPA side. I guess what made you decide between which ones to transfer and which ones not to transfer? Thanks. Yeah, Tommy, what took place is $374 million of claims were transferred to a custodian, and in return, they transferred to us what are referred to as custodial receipts. We are, we feel very good about the litigation with regard to PREPA. As you know, it's been ongoing and is the focus and a priority for us. What happens as we have different bonds where we pay the full debt service, those then become claims versus unpaid bonds. It's not a question that we pick and choose, right? Those have been completely paid off bonds. Essentially, by doing this, they are more marketable in that they become effectively securities versus, you know, claims. That's what you saw reported. That's in our 10-Q. With regard to how many buyers there are for this, we believe there are some. As you know, in the past, we sold actually about a third of our PREPA claims going back a few years ago. There are other interested parties. Whether or not we sell them remains to be seen. We thought that by doing this, it does make them more marketable. There are certain investment funds that are more likely to be able to hold them because they are now securities. They have their own CUSIP number, and things like that. Okay. Got it. Thanks for clarifying that. Secondly, looking to some of the recent headlines, the oversight board in Puerto Rico saw five of its seven members get terminated by the President. As we think about just logistically how this impacts the restructuring and the negotiations between bondholders and the oversight board and other stakeholders, how do you guys view that headline? Is it a positive? Does it delay the process? What are your viewpoints around that? There are lots of questions that all the interested parties have given the news that you just referenced. That is the dismissal of five of the board members. Hard to tell exactly what happens. I think in the coming days, we'll know a whole lot more, starting with how long does it take to replace those board members? Who are the new board members? What approach do they take? Given the challenges that we've had with PREPA and the desire, we believe, of all the creditors to reach a consensual deal, we would hope that this will turn out to be a positive. Again, until those questions that I just mentioned are answered and the approach that the newly reconstituted board takes, it would really be just speculation on our part in terms of what happens. As you know, when you go back through the history of PROMESA, which is now, geez, we're nine years into it. There were four large credits that we had that were put into Title III. Three of those have been resolved in a consensual way. It looked as though there was low probability right now that we would reach a consensual deal in the near term. Perhaps this news will lead to an increased probability for a settlement, even along a faster timeline. We just don't know at this point. Okay. Got it. And then just last one, looking also at the disclosures in the in the Q, there's a note that the Oversight Board informed the court that it was intending to modify National's settlement in a forthcoming amended plan. Could you give me some background and some details on what that's referring to? Tommy, which disclosure are you referring to? In the queue, the business developments around PREPA. It reads that following the appeal decision, the Oversight Board informed the court, National, and other parties that it intended to modify National's settlement in a forthcoming amended plan. Yeah, I think you're referring to the one that's in the current queue, but it's dated, it took place a while back. I don't think there's any new information that we're sharing on that one. That's with regard to the agreement that we had, which they wanted to modify, which has then resulted in us, we think they breached the agreement. The agreement effectively became terminated. Okay. Thanks. Thank you. We'll go next to the line of [Carlos Fardo], private investor. Please go ahead. Oh, hi. This is Carlos calling from London. Hi. Thank you very much again for your time back in February, and thank you also for the move to sell the claims or to pass the claims to the custodian. I think that I agree that it increases the marketability. Thank you for that. I think it is in line with what I suggested in February, and I really appreciate the move. In terms of the repurchase capacity, we still have the $71 million repurchase capacity. My suggestion, and this is only a suggestion, is that if the share prices boost at any point, hopefully not fall again to lower levels, to the ones that we have now, that you would consider, and I say only consider using this repurchase capacity as is at the moment. We could buy, we could repurchase approximately 20% of the shares outstanding. If we were back to lower levels, please just consider the possibility of using it. Thank you. We agree with you. We look at potential repurchases of stock constantly. You are correct, we have authorization remaining, and it is something that we are always looking at and trading that off with liquidity issues at the holding company and capacity at National through repurchase based on statutory requirements. We agree with you, it's something that we will continue to look at. Perfect. Thank you very much. If at any point I feel that we have reached, hopefully not, a level that is low enough to justify the repurchase, I will, of course, drop you a line. At the moment, I don't think that it is necessary. Just the idea of the repurchases being a possibility helps us shareholders a lot. The next question would be on the cooperation agreement with Assured and GoldenTree. Is it still the case that it will expire in December at the end of the year, but that GoldenTree and Assured can extend it until the end of March? Yes. I'm sorry. Perfect. Go ahead. Joe is going to take it. Carlos, I'm sorry. Could you repeat the question? Yes. The cooperation agreement of the both groups with Assured Guaranty and GoldenTree. At the moment, our agreement will expire at the end of the year, but GoldenTree and Assured can extend it until the end of March. Is that still the case? Is my understanding correct? Yes. Determination. Yeah, we look at that. The group looks at that. Given the news that the previous caller asked about with the reconstitution of the board, we will be gathering new information, we hope, very shortly. We hope that leads to real discussions and potentially a deal. We will continue to review that situation and how it relates to the co-op agreement. We feel that the co-op agreement has been beneficial up until this point. We will continue to look at it. Perfect. My suggestion, and again, it is only a suggestion, is that you don't extend the co-op until we have the November call. That would be, and again, you know, it's just a suggestion, a polite suggestion. You are in charge. That would be my suggestion. Okay, thank you. Thank you. The final question is regarding the PREPA exposure. At the moment, the outstanding exposure would be the total exposure would be, as per the results, $657 million. I assume that we have made a significant payment back on the 1st of July. Is it possible to give an updated figure? Yeah. Carlos, we do report that in our operating supplement. As of June 30th, the outstanding par was $504 million. We did make a $91 million and $97 million payment on July 1st. Okay. Perfect. That's fantastic. Thank you. That's all. Thank you very much again for the move with the custodian. Really, really appreciate it. Thank you. Thank you. Thank you. Thank you. We'll go next to the line of John Staley with Staley Capital Advisors. Please go ahead. Thank you. Bill, when the Trump administration removed five of the seven members of the oversight committee, I think they're all political appointees. Did it include the chairman? Yes. The current Chair of the Oversight Board was Arthur Gonzalez. He was one of the five people who was dismissed by the President. Am I correct that he has historically, is he the professor that has been, shall I say, challenging to deal with with his leadership? No, that you're referring to David Skill. He stepped down a while back. Arthur Gonzalez is a retired bankruptcy judge. Okay. All right. Who were the two that were left, and why were they left? John, there were no reasons given for that. We just know that the five were dismissed. The two who were left are Andrew Biggs and John Nixon. Do you find that a positive or a negative that those are two that stayed? Listen, it's hard for us to assess. We don't deal with each of the seven board members. We deal typically through their advisors. There's some contact occasionally with board members. As you can imagine, given all the parties involved, most of this is done through lawyers, etc., and advisors. It's hard to know at the individual board member level exactly how they view different aspects of the restructuring. In order to get this restructuring completed, I gather that while they removed five of the seven, the Oversight Board's authority remains in place so that they'll have to put on an additional five or four or three or whatever the bylaws require for this Oversight Board to continue to function and continue to exercise its so-called oversight power to approve any deal that's done. There are certain boards. The Board's still there. You're correct, John. There are certain things that can continue, but there would be certain things, for example, actually approving and confirming a plan. The board would need to have a quorum. Two people, or two directors, does not constitute a quorum. Under PROMESA, they need to have four. They need a certain number of positive votes. They will need to add board members, which our understanding is that that is the intention. It is just a question of when that happens and who the people are. Okay. All right. Are there any valuation guidelines on, for instance, when you transferred the fully paid bonds? Has there been any transactions in those bonds that suggest what market levels are out there? Yeah, it's not a very deep or liquid market. There are some trades that have been done. It's very small, so nothing along the lines of the size that we transferred into the custodian, because I mentioned that's $374 million. The small trades that have been done have been done at about $0.55 on the dollar. For the uninsured? Yes, those are for uninsured bonds, as Greg reminds me. That's roughly, again, those are small, small transactions. Okay. All right. Thank you very much. Thank you. As a reminder, if you would like to ask a question, it is the star and one on your touch-tone telephone. We'll take our next question from Patrick Stadelhoffer with Kahn Brothers. Please go ahead. Good morning. Now that you've turned your. Good morning. Good morning. Now that you've turned your claims into easy-to-sell securities, would monetizing half your exposure like you did four or five years ago move along a sale process by lowering that uncertainty you talk about and kind of narrow the bid-ask spread, or would it at least help with a special dividend in the alternative? It clearly will reduce the uncertainty with regard to PREPA, which, as you know, is one of the things that we've cited needs to happen for us to pursue a sale of the company. If we were to sell $374 million of our total exposure, which is a little bit in excess of $800 million, that clearly would be a big step in that direction. With regard to the second, it's a little bit premature to start speculating what happens with regard to special dividends, just given the remaining Puerto Rico exposure. Again, all those things are possibilities, and the probability goes up as we take those types of actions that you're suggesting. The question is, why did you take the step to transfer to the custodian now as opposed to some of these other tranches that already matured a few years ago? I guess a question around the timing. Thank you. Yeah, I think nothing special about the timing. We've been looking at this. It takes a while to put the program in place. We thought we'd gotten to a quantum of bond claims where it was meaningful, and that by increasing the marketability of those, it might help facilitate sales if we found attractive prices to transact at. As we've said, we've also sold them without putting them into a custodian and creating custodial receipts where we have sold claims. Again, we thought it was a good thing to do. Nothing in particular about this time. There was no specific catalyst to doing it right now. Great, thank you. Thank you. We'll take our next question from Paul Saunders with Hutch Capital. Morning, Bill. Thanks for taking my question. Sure. Morning. On the transfer claims that we're talking about to the custodian, you mentioned $374 million. Is that all of the claims? My understanding was you had about $300 million previously, and now you just paid $92 million. Rough numbers, $390 million, $400 million. Did you leave any behind? If so, was there a reason for that? No, we didn't leave any behind. As I mentioned, you can't transfer until you've paid off the full bond, right? When you go back, we talk about our PREPA exposure, but it's made up of lots of different bonds that we insured. Even though you saw $91 million getting paid, it's possible that none of those were the last payment on a particular bond. It's just a question of when you've made the last debt service payment and the bond's completely paid off that we can then transfer it and create a new CUSIP for it. Perfect. That makes perfect sense. Last one, this is also pretty tiny, but it did look like National's salvage went down a little bit. Loss reserves went up slightly. I'm assuming that's changing the recovery assumptions on PREPA. If so, I mean, I guess is that right? If so, was there a reason that you thought sort of PREPA recoveries might be a little bit lower than as of last quarter? Yeah. The change you're seeing is a result of modifications to assumptions within our PREPA scenarios. Each quarter, we look at those assumptions, and we may make modifications. This quarter, we did make a small modification, which generated a small loss, which you're seeing reflected in the results. Okay. Can you, you know, obviously, it sounds like you don't really want to provide any more color on that. Was there something that happened that made you change that? While we're on that, is that something like where, you know, the market obviously views the board decision by Trump as positive? Is that something you'd factor into your recovery assumptions, that now maybe market prices of PREPA claims are moving higher or something? Would you factor that into the recovery assumptions for the quarterly balance sheet? Yeah. Paul, with regard to your earlier comment, in terms of the current reserve that was reflected in the second quarter results, just following up on Joe's comments, it really had to do more with timing as opposed to the dollar or% recovery. As you know, as we follow the litigation process, every quarter we look at it and we try to estimate how much longer it's going to take. No one has a precise answer. I think the declining salvage that you saw had to do with it taking longer than perhaps we expected three months earlier. Nothing more than that. There was no new information with regard to what the oversight pool was going to offer, what the bondholders might accept, or where there might be an agreement reached. With regard to your follow-up question regarding the events this week and what will be a newly constituted board in the near future, we will take that into account when we do reserves for third quarter based on what we learn. When the board is in place, does the board and its advisors have a new approach with regard to perhaps increasing the likelihood that a consensual deal is reached versus litigating this and people put forth estimates how long it could take to litigate? In that sense, absolutely, it will get factored into the reserves if we think that has changed any assumptions in the scenarios that we used. That's great. Sorry, one more for me, Bill, just while I have you, because you're being so open with us on these, and it's very helpful for me. The articles on that, the board news are, you know, as I said, very positive. There's a view that Trump is bondholder-friendly. Can you, being a little closer to the situation than me, do you agree with that? Do you have any sort of context, or have you heard him discuss Puerto Rico specifically or anything like that in terms of how his views might be different than the current oversight board? Have you heard any expectations on, I guess, Trump's view of how he would resolve the difference between the island and the oversight board and the bondholders? With regard to the last part of your question, none of us here have heard anything from the President with regard to Puerto Rico, right? Whether it be any public statements, which we're unaware of any, or anything that we've heard through advisors or any of his cabinet or anything like that. With regard to the early part of the question and what does this mean and how will it be approached, and the news seems to have been a positive, as you mentioned, we obviously see all the same things. Given that we've been at this for quite a long time, it would be great if, in fact, the market reaction is correct and this moves along faster than perhaps people anticipated even a week ago. Whether it's going to be more friendly to bondholders, all those things, hopefully, we'll learn more in the very near future. We like to be optimistic. Again, what we know in terms of facts are that five board members have been dismissed, and that's all we know at this point. Sounds good. Thank you, Bill. Thank you. At this time, I am showing no further questions, so I'd like to turn the floor back over to Greg Diamond. Please go ahead. Thank you, Erica, and thanks to those listening to our call today. Please contact us directly if you have additional questions. We also recommend that you visit our website at mbia.com for additional information on our company. Thank you for your interest in MBIA. Good day and goodbye. We'd like to thank everybody for your participation. Please feel free to disconnect your line at any time.